The main topic addressed in this issue of Setting the Example is an ethical culture. Our lead article looks at the importance and value of an ethical culture relative to the apparent obstacles to the task of creating an ethical culture. This is supported by an in-depth review of what constitutes a sound ethics strategy, and by the article which we recommend, “Boring ethics and code of conduct training enables risk to go unmanaged”. This issue also includes a commentary on best practice for Social and Ethics Committees and insight from a Department of Trade & Industry Social and Ethics Committees conference.

CREATING AN ETHICAL CULTURE IS A GREAT IDEA, BUT …

In theory creating an ethical culture makes great sense and should be a high priority objective for all organisations. But
in practice there are a couple of stumbling blocks to realising this goal. Firstly, organisations do not
always have a clear, strong rationale as regards what organisational or business need the culture change
would fulfil or what benefit it would deliver. Secondly, changing an organisation’s culture - in this case
to be more ethical - is widely recognised as a very difficult leadership task. Unpacking these issues is
important to ensure that the pursuit of an ethical culture is not undermined.
Read More...

WHAT’S THE QUALITY OF YOUR ETHICS STRATEGY?

Published in 8 December 2016 issue of Thought Leadership by USB-ED Ltd

A request to write an ethics strategy for an organisation, in theory, should be viewed as welcome consulting work. It is
also a relevant request given both the importance of workplace ethics and the crucial role that strategy
fulfils in an organisation. So what’s the catch?
Read more…

On 15 February 2017 Comair’s 14 year legal battle against South African Airways (SAA) resulted in the South Gauteng High
Court ordering SAA to pay Comair R1.16 billion (R554 million plus interest at 15.5%) for engaging in anticompetitive
behaviour involving travel agent incentive schemes between 1999 and 2005.

Comair is the second airline to succeed in a claim against the national carrier concerning anti-competitive
conduct. Nationwide launched its claim in 2001. In August 2016 the South Gauteng High Court ordered SAA
to pay Nationwide R104.6m plus interest as damages for its uncompetitive practices, most of which related
to the travel agent sector. But it could be regarded as too little too late because the airline went into
liquidation in 2008. The court agreed with the Competition Tribunal that SAA's behaviour from 2001 to 2005
was the biggest contributing factor to Nationwide’s loss in passenger volumes.

This situation can be viewed as a penalty that SAA deserves. As Vernon Bricknell, former owner
and MD of Nationwide Airlines, told Fin24 in August 2016: it "serves them right". But there are more implications
to this than simply that the law prevailed.

The latest judgement adds to the embattled airline’s struggle to remain a going concern. It
also raises the possibility that yet another bailout would be required to keep SAA solvent. The most recent
bailout was in September 2016 when Finance Minister Pravin Gordhan approved a R5 billion going concern
guarantee with conditions. And therein lies the sting in the tail – because the South African tax payer
foots the bill for the bailouts.

Thus the true financial cost of the penalty is not borne exclusively by the perpetrators: Instead
the cost of misconduct is effectively “shared” among South African tax payers. This raises two crucial
ethical questions. Does the fine realise its intended outcome of being an effective deterrent to unethical
practices? Or does this situation warrant looking at personal liability?

by Cynthia Schoeman

An update on Social and Ethics Committees

Our August 2015 newsletter article posed the question
of whether Social and Ethics Committees still needed guidance, and answered it in the affirmative with five
recommendations that are still relevant. Adding to this are two further contributions - King IV
TM
recommendations
and a discussion about proposed changes to the Companies Act Regulations by the Department of Trade and Industry.Read more …

Bank collusion: but no criminal sanction

The financial services sector is again in the news for all the
wrong reasons. This time 17 banks, including three of SA's big banks, are accused of price-fixing and market
manipulation in the foreign exchange market.

But, even if found guilty, none of the banks face the prospect
of criminal sanction because the Competition Act amendment to provide for criminal sanctions to be imposed
on individuals for certain competition law contraventions only came in effect from May 2016, which was after
these contraventions were committed. While the Competition Commission is expected to pursue the maximum possible
fine, past fines levied on organisations in this sector internationally do not appear to have curtained incidents
of misconduct.

Hereafter, hopefully, the opportunity for unethical behaviour in SA will be balanced with the
much higher personal liability.

Recommended reading

About Ethics Monitoring & Management Services (Pty) Ltd

Ethics Monitoring & Management Services
was started by Cynthia Schoeman to help organisations to improve ethics in the workplace and to encourage them
to manage ethics proactively. Cynthia developed The Ethics Monitor, a web-based ethics survey, which enables
organisations to measure, monitor and report on their ethical status. Ethics Monitoring & Management Services
also offers ethics talks, workshop, consulting and training.